US Dollar Index Rises Above 99 as Fed Data and Trump-Xi Summit Reshape the Market
- US Dollar Index rises above 99.10 level for the fifth session in a row
- US April Retail Sales grew 0.5%, beyond expectations
- White House official described the Trump-Xi talks as “good,” exploring economic cooperations
- Strong US retail sales and inflation data boosted expectations for a hawkish Federal Reserve
Why Is the Dollar Climbing? 3 Key Drivers
The US inflation rate hike, the new Fed chair, and the recent Trump-XI Summit updates are the key price drivers for USD now.
Inflation Running Hot- Rate Cut Hopes Dashed
April’s US inflation data came in stronger than expected. CPI rose 3.8% year-on-year (above the 3.7% forecast), PPI climbed 6%, its fastest pace since 2022, and Retail Sales rose 0.5% MoM, all driven partly by energy price pressures from the Middle-East tensions. Markets have now fully priced out any Fed rate cut in 2026, with odds of a December rate hike rising to around 35%.
New Fed Chair & Policy Uncertainty
The US Senate confirmed Kevin Warsh as the new Federal Reserve Chair, replacing Jerome Powell, whose term ended May 15. At the same time, Warsh has previously hinted at a willingness to cut rates sooner than expected. So, the policy rate might continue this hike for a longer time, extending gains for a fifth consecutive trading session.
Trump-Xi Summit in Beijing Bringing Trade Hopes
President Trump and President Xi held a high-stakes two-day summit in Beijing on May 14–15, the first US presidential visit to China since 2017, covering trade, tariffs, Taiwan, rare earths, and Iran. President Trump stated he wants “better than ever” relations with China.
US State Secretary Marco Rubio told NBC News,
We’re not asking for China’s help. We don’t need their help.”
But Trump told Fox News,
“Look, anybody that buys that much oil has obviously got some kind of a relationship with him,”
Meanwhile, Chinese President Xi Jinping reportedly offered support in helping de-escalate the Iran conflict.
Technical Indicators: What the Charts Are Saying
The US Dollar index (DXY) indicator is flashing a cautiously bullish signal.
- Resistance: 98.99, 50-day Simple Moving Average (SMA)
- Support: 98.53, 200-day SMA
- RSI (Relative Strength Index): 54.15, Recovering from near-40 levels
What Should Traders Do Now?
Key market focus areas now include:
- Any concrete trade agreements emerging from the Trump-Xi summit, bullish for risk appetite, could cap safe-haven dollar demand
- Iran ceasefire or peace developments could reduce energy inflation and shift the Fed’s tone
- Kevin Warsh’s first public statements as Fed Chair and any hints about the June FOMC meeting
- US Initial Jobless Claims and any further inflation-related data releases
If DXY sustains above 99.00, bullish momentum could continue toward 100.00. However, any signs of weaker US data or improving global risk sentiment may trigger profit-taking.
